Performance Administration ROI – Think Before You Invest

Few today dispute the need for Enterprise Performance Management options – with greater than 65% of US companies and 62% plus European companies deploying Balanced Scorecard or strategic EPM techniques within their organizations. As with all enterprise systems solutions on the other hand, the hyperbole from consultants on value insert has been prodigious and sometimes stupefying.
What really matters for innovative investors in Asia, and for SMEs throughout the world, is understanding what evidence there’s of the ROI, of these, oftentimes, significant devices infrastructure investments?
Oracle EPM
A 2007 survey of 200 large companies by the Hackett Group of Atlanta, found that organizations deploying ‘world-class’ EPM methods (defined as companies in the top quartile for efficiency and performance) enjoyed equity marketplace returns of 2.4 times of these peers within their industry (including stock cost and dividends). This study as well revealed a critical success factor in successful deployment was ‘pervasiveness’ – that is to say, a lot more operations managers had access to the online reporting tools that in their peers in the industry. It is thus where PM permeates throughout the organization that we see the real business performance gains (collateral and value).
Pervasiveness comes with a cost. Many organizations have driven PM from the ERP or from the Finance systems, frequently drowning their Reporting systems in data and remaining ‘information poor’. In so doing, mid to large sized companies across the USA, Europe and Australia continue steadily to spend heavily in re-aligning, simplifying and consolidating their EPM designs. In so many cases, execution has failed, due to both ‘poorly-organized deployments’ of simplistic Balanced Scorecards, and for that reason of monumental complexities imposed by ‘poor-fit’ EPM techniques invariably add-ons to key ERPs (they shall stay nameless). Thus knowing what to measure from the inception is vital – get it right at the top and construct the ‘decision architecture’ from the most notable down.
Pervasiveness will not mean saturation. Making the proper data available at the right level will demand the construction of unique dashboards for each ‘entity’ in your measurement hierarchy – it must also mean additional prices in both selecting the best ‘dashboard’ software program, and in acquiring the expertise to oversee and manage the deployment. Targeting your choice makers – not the analysts is vital – put information into the hands of those have the power and influence to enact transformation.
Another key variable in determining the prospective ROI of EPM initiatives is the ‘Culture’ of the business. A 2007 BRWS survey discovered that both largest obstacles to effective EPM deployment were; (a) lack of accountability, and (b) insufficient readiness to support a measurement driven technique of management. Ironically, it is very often therefore that organizations try to introduce EPM systems, and by doing this bury themselves in interior conflict and significant It again and consulting costs overruns. Consequently, it’s vital to learn your restrictions before you invest – to create the foundations for accountability before buying the technologies.
As important as the option of the right data at the proper level, is learning how to use data to effect judgements. Will your dashboard program enable a hierarchical view of your business? Will it enable ‘drill through’ to key element performance drivers at operational, financial and market – sales levels? Can you meet regularly (virtually or otherwise) to review key data? Are staff at all levels alert to ‘performance data’ which is relevant to work they control? Is your EPM system associated with your performance appraisal and benefits systems? Without consideration of the method that you use your EPM system ahead of your investment, there will be no ROI – but there will be ever increasing costs.
The implications? We recommend before you invest, you take into account the following:
1. READINESS – Conduct a ‘EPM or BSC Readiness Assessment’ – know where you have weaknesses, and don’t invest until you established the right foundations;
2. CEO COMMITMENT – ensure you have the buy inside of off the Senior Executives before starting – no buy-in is really a RED LIGHT;
3. ROAD MAP – clearly map out the pathway to deployment over a 18 30 days to 3 year horizon – understand where and when you must invest, and who to include at different stages;
4. BUSINESS CASE – invest time in understanding the total spend and the potential ‘whole cost of ownership’ of this system – and quantify the benefits before you begin;
5. MAP THE INFORMATION ARCHITECTURE BEFORE YOU INVEST – know very well what information key decision manufacturers need before you build your system;
6. MAKE IT PERVASIVE – understand that for this to deliver real ROI, you will need to ensure it is pervasive – making meaningful data available at all decision making levels – arrange for these costs;
7. MANAGE IT – Reporting lacking any effective Performance Management Process is worthless – structure and control your management processes to fully align with and support EPM deployment.
In articles to follow, I’ll review some of the technology options and considerations, to guarantee the optimal ROI on your own EPM investment.

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